The Non-Fossil Fuel Obligation (NFFO) refers to a collection of

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requiring the electricity

distribution network operator A distribution network operator (DNO), also known as a distribution system operator (DSO), is the operator of the electric power distribution system which delivers electricity to most end users. Each country may have many local distribution networ ...

s in

England England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe b ...

and

Wales Wales ( cy, Cymru ) is a country that is part of the United Kingdom. It is bordered by England to the east, the Irish Sea to the north and west, the Celtic Sea to the south west and the Bristol Channel to the south. It had a population in ...

to purchase electricity from the

nuclear power Nuclear power is the use of nuclear reactions to produce electricity. Nuclear power can be obtained from nuclear fission, nuclear decay and nuclear fusion reactions. Presently, the vast majority of electricity from nuclear power is produced ...

and renewable energy sectors. Similar mechanisms operate in

Scotland Scotland (, ) is a Countries of the United Kingdom, country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a Anglo-Scottish border, border with England to the southeast ...

(the Scottish Renewable Orders under the Scottish Renewables Obligation) and

Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...

(the Northern Ireland Non-Fossil Fuel Obligation). Five orders were made under the NFFO before the UK government replaced it with the

Renewables Obligation The Renewables Obligation (RO) is designed to encourage generation of electricity from eligible renewable sources in the United Kingdom. It was introduced in England and Wales and in a different form (the Renewables Obligation (Scotland)) in Scot ...

, the first order or 'tranche' was on October 1, 1990 with an average price of 7.51 pence per kWh being paid to renewable energy generators, the fifth and last was in September 1998 at an average of 2.71 pence per kWh.

Background

The Non-Fossil Fuel Obligation was put in place under the powers of the

Electricity Act 1989 The Electricity Act 1989 (c. 29) provided for the privatisation of the electricity supply industry in Great Britain, by replacing the Central Electricity Generating Board in England and Wales and by restructuring the South of Scotland Electricit ...

, under which

electricity generation Electricity generation is the process of generating electric power from sources of primary energy. For utilities in the electric power industry, it is the stage prior to its delivery ( transmission, distribution, etc.) to end users or its s ...

in the UK was

privatised Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...

. The original intention was to provide financial support to the UK nuclear power generators, which continued to be state-owned. The proposals were enlarged in scope before the obligation was brought into operation in 1990 to include the renewable energy sector. Contracts from the last three rounds remain in place with the generators receiving the agreed amount from the NFPA and the NFPA effectively taking ownership of the Renewables Obligation certificate (ROC) to which the generator is entitled.

Funding

Funding for the NFFO was originally generated by the Fossil Fuel Levy, a levy placed on all electricity consumption in the UK. This was collected by

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, which paid it to the Non-Fossil Purchasing Agency, a body created in 1990 by the

public electricity supplier Public electricity suppliers (PES) were the fourteen electricity companies created in Great Britain when the electricity market in the United Kingdom was privatised following the Electricity Act 1989. The Utilities Act 2000 subsequently split t ...

s to purchase on the supplier's behalf. The purchasing agency is based in Newcastle upon Tyne. Since the introduction in 2001 of the

New Electricity Trading Arrangements New Electricity Trading Arrangements (NETA) is the system of market trading arrangements under which electricity is traded in the United Kingdom's wholesale electricity market as of 27 March 2001. The arrangements provided that parties could trade o ...

, electricity suppliers bid for the electricity and ROCs in competitive auctions held by the Non-Fossil Purchasing Agency, with any shortfall in price being funded by the Levy. As a result of these arrangements, the Non-Fossil Fuel Obligation has been generating a trading surplus, expected to have reached £500m by 2008. The government have been criticised for siphoning off funds from this surplus to contribute to the exchequer, instead of using it to support renewable energy in other ways.

Only renewables

In the past nuclear power was by far the greatest beneficiary of this system, and the associated fossil fuel levy was designed to support the nuclear power industry. The new emphasis is on promoting renewables, and nuclear power is no longer eligible.

References

{{Energy in the United Kingdom, govreg Electric power in the United Kingdom Renewable energy in the United Kingdom

Background

Funding

Only renewables

See also

References